EBAY INC. et al. v. MERCEXCHANGE, L. L. C.

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388 OCTOBER TERM, 2005
Syllabus
EBAY INC. et al. v. MERCEXCHANGE, L. L. C.
certiorari to the united states court of appeals for
the federal circuit
No. 05–130. Argued March 29, 2006—Decided May 15, 2006
Petitioners operate popular Internet Web sites that allow private sellers
to list goods they wish to sell. Respondent sought to license its busi
ness method patent to petitioners, but no agreement was reached. In
respondent’s subsequent patent infringement suit, a jury found that its
patent was valid, that petitioners had infringed the patent, and that
damages were appropriate. However, the District Court denied re
spondent’s motion for permanent injunctive relief. In reversing, the
Federal Circuit applied its “general rule that courts will issue perma
nent injunctions against patent infringement absent exceptional circum
stances.” 401 F. 3d 1323, 1339.
Held: The traditional four-factor test applied by courts of equity when
considering whether to award permanent injunctive relief to a prevail
ing plaintiff applies to disputes arising under the Patent Act. That test
requires a plaintiff to demonstrate: (1) that it has suffered an irreparable
injury; (2) that remedies available at law are inadequate to compensate
for that injury; (3) that considering the balance of hardships between
the plaintiff and defendant, a remedy in equity is warranted; and (4) that
the public interest would not be disserved by a permanent injunction.
The decision to grant or deny such relief is an act of equitable discretion
by the district court, reviewable on appeal for abuse of discretion.
These principles apply with equal force to Patent Act disputes. “[A]
major departure from the long tradition of equity practice should not
be lightly implied.” Weinberger v. Romero-Barcelo, 456 U. S. 305, 320.
Nothing in the Act indicates such a departure. Pp. 391–394.
401 F. 3d 1323, vacated and remanded.
Thomas, J., delivered the opinion for a unanimous Court. Roberts,
C. J., filed a concurring opinion, in which Scalia and Ginsburg, JJ.,
joined, post, p. 394. Kennedy, J., filed a concurring opinion, in which
Stevens, Souter, and Breyer, JJ., joined, post, p. 395.
Carter G. Phillips argued the cause for petitioners. With
him on the briefs were Richard D. Bernstein, Virginia A.
Seitz, and Allan M. Soobert.

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389 Cite as: 547 U. S. 388 (2006)
Counsel
Jeffrey P. Minear argued the cause for the United States
as amicus curiae in support of respondent. With him on
the brief were Solicitor General Clement, Assistant Attor
ney General Barnett, Acting Assistant Attorney General
Katsas, Deputy Solicitor General Hungar, Anthony J.
Steinmeyer, David Seidman, Mark R. Freeman, John M.
Whealan, Cynthia C. Lynch, and Heather F. Auyang.
Seth P. Waxman argued the cause for respondent. With
him on the brief were Paul R. Q. Wolfson, Scott L. Robert
son, Gregory N. Stillman, Jennifer A. Albert, David M.
Young, and Brian M. Buroker.*
*Briefs of amici curiae urging reversal were filed for the American
Innovators’ Alliance by Theodore B. Olson and Matthew D. McGill; for
the Association of the Bar of the City of New York by James W. Dabney
and Peter A. Sullivan; for the Business Software Alliance et al. by Ken
neth S. Geller and Andrew J. Pincus; for the Computer & Communications
Industry Association by Jonathan Band; for the Electronic Frontier Foun
dation et al. by Jason Schultz; for Nokia Corp. by Michael P. Kenny; for
Research in Motion, Ltd., by Martin R. Glick, Sarah M. King, Herbert L.
Fenster, Lawrence S. Ebner, Henry C. Bunsow, David W. Long, and Mark
L. Whitaker; for the Securities Industry Association et al. by W. Hardy
Callcott and Richard Whiting; for Time Warner Inc. et al. by Kathleen
M. Sullivan, Daniel H. Bromberg, and Margret M. Caruso; for Yahoo!
Inc. by Christopher J. Wright, Timothy J. Simeone, and Lisa G. McFall;
and for Malla Pollack et al. by Ms. Pollack, pro se.
Briefs of amici curiae urging affirmance were filed for the American
Bar Association by Michael S. Greco, Robert F. Altherr, Jr., Nina L. Med
lock, and Joseph M. Potenza; for the Biotechnology Industry Organization
by Nancy J. Linck and Brian P. Barrett; for the General Electric Co. et al.
by John C. Englander, J. Anthony Downs, Kevin P. Martin, and William
F. Sheehan; for Law Professors by Thomas G. Field, Jr., Craig S. Jepson,
and Karl F. Jorda, all pro se; for the Pharmaceutical Research and Manu
facturers of America by Harry J. Roper, Aaron A. Barlow, Paul M.
Smith, and Katherine A. Fallow; for Qualcomm Inc. et al. by Kenneth C.
Bass III, Robert G. Sterne, Edward J. Kessler, and Linda E. Horner; for
Rembrandt IP Management, LLC, by Lawrence S. Robbins and Roy T.
Englert, Jr.; for Technology, Patents & Licensing, Inc., et al. by Keara A.
Bergin; for the United Inventors Association et al. by Robert M. Asher
and Erik Paul Belt; for Various Law & Economics Professors by F. Scott
Kieff and Richard A. Epstein, both pro se; for the Wisconsin Alumni Re

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390 EBAY INC. v. MERCEXCHANGE, L. L. C.
Opinion of the Court
Justice Thomas delivered the opinion of the Court.
Ordinarily, a federal court considering whether to award
permanent injunctive relief to a prevailing plaintiff applies
the four-factor test historically employed by courts of equity.
Petitioners eBay Inc. and Half.com, Inc., argue that this tra
ditional test applies to disputes arising under the Patent Act.
We agree and, accordingly, vacate the judgment of the Court
of Appeals.
I
Petitioner eBay operates a popular Internet Web site that
allows private sellers to list goods they wish to sell, either
through an auction or at a fixed price. Petitioner Half.com,
now a wholly owned subsidiary of eBay, operates a similar
Web site. Respondent MercExchange, L. L. C., holds a
number of patents, including a business method patent for
an electronic market designed to facilitate the sale of goods
between private individuals by establishing a central author
ity to promote trust among participants. See U. S. Patent
No. 5,845,265. MercExchange sought to license its patent
to eBay and Half.com, as it had previously done with other
companies, but the parties failed to reach an agreement.
MercExchange subsequently filed a patent infringement suit
against eBay and Half.com in the United States District
Court for the Eastern District of Virginia. A jury found
search Foundation et al. by Gary M. Hoffman and Woody N. Peterson; for
Martin Cooper et al. by Justin A. Nelson, Parker C. Folse III, Stephen D.
Susman, Mark L. D. Wawro, and Max L. Tribble, Jr.; and for Steven M.
Hoffberg by Robert J. Rando and Mr. Hoffberg, pro se.
Briefs of amici curiae were filed for the American Intellectual Property
Law Association et al. by Joseph S. Cianfrani, Melvin C. Garner, and
Martha B. Schneider; for the Association of American Universities et al.
by Morgan Chu and Laura W. Brill; for International Business Machines
Corp. by Christopher A. Hughes and Mark J. Abate; for the Patent, Trade
mark & Copyright Section of the Bar Association of the District of Colum
bia by Blair E. Taylor and Susan M. Dadio; for Teva Pharmaceuticals
USA, Inc., by James Galbraith and Elizabeth J. Holland; and for 52 Intel
lectual Property Professors by Mark A. Lemley, pro se.

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391 Cite as: 547 U. S. 388 (2006)
Opinion of the Court
that MercExchange’s patent was valid, that eBay and
Half.com had infringed that patent, and that an award of
damages was appropriate.1
Following the jury verdict, the District Court denied
MercExchange’s motion for permanent injunctive relief.
275 F. Supp. 2d 695 (2003). The Court of Appeals for the
Federal Circuit reversed, applying its “general rule that
courts will issue permanent injunctions against patent in
fringement absent exceptional circumstances.” 401 F. 3d
1323, 1339 (2005). We granted certiorari to determine the
appropriateness of this general rule. 546 U. S. 1029 (2005).
II
According to well-established principles of equity, a plain
tiff seeking a permanent injunction must satisfy a four-factor
test before a court may grant such relief. A plaintiff must
demonstrate: (1) that it has suffered an irreparable injury;
(2) that remedies available at law, such as monetary dam
ages, are inadequate to compensate for that injury; (3) that,
considering the balance of hardships between the plaintiff
and defendant, a remedy in equity is warranted; and (4) that
the public interest would not be disserved by a permanent
injunction. See, e. g., Weinberger v. Romero-Barcelo, 456
U. S. 305, 311–313 (1982); Amoco Production Co. v. Gambell,
480 U. S. 531, 542 (1987). The decision to grant or deny per
manent injunctive relief is an act of equitable discretion by
the district court, reviewable on appeal for abuse of discre
tion. See, e. g., Romero-Barcelo, 456 U. S., at 320.
These familiar principles apply with equal force to dis
putes arising under the Patent Act. As this Court has long
recognized, “a major departure from the long tradition of
equity practice should not be lightly implied.” Ibid.; see
also Amoco, supra, at 542. Nothing in the Patent Act indi
1 EBay and Half.com continue to challenge the validity of Merc-
Exchange’s patent in proceedings pending before the United States Patent
and Trademark Office.

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392 EBAY INC. v. MERCEXCHANGE, L. L. C.
Opinion of the Court
cates that Congress intended such a departure. To the con
trary, the Patent Act expressly provides that injunctions
“may” issue “in accordance with the principles of equity.”
35 U. S. C. § 283.2
To be sure, the Patent Act also declares that “patents shall
have the attributes of personal property,” § 261, including
“the right to exclude others from making, using, offering for
sale, or selling the invention,” § 154(a)(1). According to the
Court of Appeals, this statutory right to exclude alone justi
fies its general rule in favor of permanent injunctive relief.
401 F. 3d, at 1338. But the creation of a right is distinct
from the provision of remedies for violations of that right.
Indeed, the Patent Act itself indicates that patents shall have
the attributes of personal property “[s]ubject to the provi
sions of this title,” 35 U. S. C. § 261, including, presumably,
the provision that injunctive relief “may” issue only “in ac
cordance with the principles of equity,” § 283.
This approach is consistent with our treatment of injunc
tions under the Copyright Act. Like a patent owner, a
copyright holder possesses “the right to exclude others from
using his property.” Fox Film Corp. v. Doyal, 286 U. S. 123,
127 (1932); see also id., at 127–128 (“A copyright, like a pat
ent, is at once the equivalent given by the public for benefits
bestowed by the genius and meditations and skill of individu
als and the incentive to further efforts for the same impor
tant objects” (internal quotation marks omitted)). Like the
Patent Act, the Copyright Act provides that courts “may”
grant injunctive relief “on such terms as it may deem reason
able to prevent or restrain infringement of a copyright.” 17
U. S. C. § 502(a). And as in our decision today, this Court
has consistently rejected invitations to replace traditional
equitable considerations with a rule that an injunction auto
2 Section 283 provides that “[t]he several courts having jurisdiction of
cases under this title may grant injunctions in accordance with the princi
ples of equity to prevent the violation of any right secured by patent, on
such terms as the court deems reasonable.”

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Opinion of the Court
matically follows a determination that a copyright has been
infringed. See, e. g., New York Times Co. v. Tasini, 533 U. S.
483, 505 (2001) (citing Campbell v. Acuff-Rose Music, Inc.,
510 U. S. 569, 578, n. 10 (1994)); Dun v. Lumbermen’s Credit
Assn., 209 U. S. 20, 23–24 (1908).
Neither the District Court nor the Court of Appeals below
fairly applied these traditional equitable principles in decid
ing respondent’s motion for a permanent injunction. Al
though the District Court recited the traditional four-factor
test, 275 F. Supp. 2d, at 711, it appeared to adopt certain
expansive principles suggesting that injunctive relief could
not issue in a broad swath of cases. Most notably, it con
cluded that a “plaintiff ’s willingness to license its patents”
and “its lack of commercial activity in practicing the patents”
would be sufficient to establish that the patent holder would
not suffer irreparable harm if an injunction did not issue.
Id., at 712. But traditional equitable principles do not per
mit such broad classifications. For example, some patent
holders, such as university researchers or self-made inven
tors, might reasonably prefer to license their patents, rather
than undertake efforts to secure the financing necessary to
bring their works to market themselves. Such patent hold
ers may be able to satisfy the traditional four-factor test, and
we see no basis for categorically denying them the opportu
nity to do so. To the extent that the District Court adopted
such a categorical rule, then, its analysis cannot be squared
with the principles of equity adopted by Congress. The
court’s categorical rule is also in tension with Continental
Paper Bag Co. v. Eastern Paper Bag Co., 210 U. S. 405, 422–
430 (1908), which rejected the contention that a court of eq
uity has no jurisdiction to grant injunctive relief to a patent
holder who has unreasonably declined to use the patent.
In reversing the District Court, the Court of Appeals de
parted in the opposite direction from the four-factor test.
The court articulated a “general rule,” unique to patent dis
putes, “that a permanent injunction will issue once infringe

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394 EBAY INC. v. MERCEXCHANGE, L. L. C.
Roberts, C. J., concurring
ment and validity have been adjudged.” 401 F. 3d, at 1338.
The court further indicated that injunctions should be denied
only in the “unusual” case, under “exceptional circum
stances” and “ ‘in rare instances . . . to protect the public
interest.’ ” Id., at 1338–1339. Just as the District Court
erred in its categorical denial of injunctive relief, the Court
of Appeals erred in its categorical grant of such relief.
Cf. Roche Products, Inc. v. Bolar Pharmaceutical Co., 733
F. 2d 858, 865 (CA Fed. 1984) (recognizing the “considerable
discretion” district courts have “in determining whether the
facts of a situation require it to issue an injunction”).
Because we conclude that neither court below correctly
applied the traditional four-factor framework that governs
the award of injunctive relief, we vacate the judgment of the
Court of Appeals, so that the District Court may apply that
framework in the first instance. In doing so, we take no
position on whether permanent injunctive relief should or
should not issue in this particular case, or indeed in any num
ber of other disputes arising under the Patent Act. We hold
only that the decision whether to grant or deny injunctive
relief rests within the equitable discretion of the district
courts, and that such discretion must be exercised consistent
with traditional principles of equity, in patent disputes no
less than in other cases governed by such standards.
Accordingly, we vacate the judgment of the Court of Ap
peals and remand the case for further proceedings consistent
with this opinion.
It is so ordered.
Chief Justice Roberts, with whom Justice Scalia and
Justice Ginsburg join, concurring.
I agree with the Court’s holding that “the decision
whether to grant or deny injunctive relief rests within the
equitable discretion of the district courts, and that such dis
cretion must be exercised consistent with traditional princi
ples of equity, in patent disputes no less than in other cases

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395 Cite as: 547 U. S. 388 (2006)
Kennedy, J., concurring
governed by such standards,” ante, at 394, and I join the
opinion of the Court. That opinion rightly rests on the
proposition that “a major departure from the long tradition
of equity practice should not be lightly implied.” Wein
berger v. Romero-Barcelo, 456 U. S. 305, 320 (1982); see
ante, at 391.
From at least the early 19th century, courts have granted
injunctive relief upon a finding of infringement in the vast
majority of patent cases. This “long tradition of equity
practice” is not surprising, given the difficulty of protecting
a right to exclude through monetary remedies that allow an
infringer to use an invention against the patentee’s wishes—
a difficulty that often implicates the first two factors of the
traditional four-factor test. This historical practice, as the
Court holds, does not entitle a patentee to a permanent in
junction or justify a general rule that such injunctions
should issue. The Federal Circuit itself so recognized in
Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F. 2d
858, 865–867 (1984). At the same time, there is a difference
between exercising equitable discretion pursuant to the es
tablished four-factor test and writing on an entirely clean
slate. “Discretion is not whim, and limiting discretion ac
cording to legal standards helps promote the basic principle
of justice that like cases should be decided alike.” Martin
v. Franklin Capital Corp., 546 U. S. 132, 139 (2005). When
it comes to discerning and applying those standards, in this
area as others, “a page of history is worth a volume of logic.”
New York Trust Co. v. Eisner, 256 U. S. 345, 349 (1921) (opin
ion for the Court by Holmes, J.).
Justice Kennedy, with whom Justice Stevens, Jus
tice Souter, and Justice Breyer join, concurring.
The Court is correct, in my view, to hold that courts should
apply the well-established, four-factor test—without resort
to categorical rules—in deciding whether to grant injunctive
relief in patent cases. The Chief Justice is also correct

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396 EBAY INC. v. MERCEXCHANGE, L. L. C.
Kennedy, J., concurring
that history may be instructive in applying this test. Ante,
at 395 (concurring opinion). The traditional practice of issu
ing injunctions against patent infringers, however, does not
seem to rest on “the difficulty of protecting a right to exclude
through monetary remedies that allow an infringer to use an
invention against the patentee’s wishes.” Ibid. (Roberts,
C. J., concurring). Both the terms of the Patent Act and the
traditional view of injunctive relief accept that the existence
of a right to exclude does not dictate the remedy for a viola
tion of that right. Ante, at 391–392 (opinion of the Court).
To the extent earlier cases establish a pattern of granting an
injunction against patent infringers almost as a matter of
course, this pattern simply illustrates the result of the four
factor test in the contexts then prevalent. The lesson of the
historical practice, therefore, is most helpful and instructive
when the circumstances of a case bear substantial parallels
to litigation the courts have confronted before.
In cases now arising trial courts should bear in mind that
in many instances the nature of the patent being enforced
and the economic function of the patent holder present con
siderations quite unlike earlier cases. An industry has de
veloped in which firms use patents not as a basis for produc
ing and selling goods but, instead, primarily for obtaining
licensing fees. See FTC, To Promote Innovation: The
Proper Balance of Competition and Patent Law and Policy,
ch. 3, pp. 38–39 (Oct. 2003), available at http://www.ftc.gov/
os/2003/10/innovationrpt.pdf (as visited May 11, 2006, and
available in Clerk of Court’s case file). For these firms, an
injunction, and the potentially serious sanctions arising from
its violation, can be employed as a bargaining tool to charge
exorbitant fees to companies that seek to buy licenses to
practice the patent. See ibid. When the patented inven
tion is but a small component of the product the companies
seek to produce and the threat of an injunction is employed
simply for undue leverage in negotiations, legal damages
may well be sufficient to compensate for the infringement

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Kennedy, J., concurring
and an injunction may not serve the public interest. In ad
dition injunctive relief may have different consequences for
the burgeoning number of patents over business methods,
which were not of much economic and legal significance in
earlier times. The potential vagueness and suspect validity
of some of these patents may affect the calculus under the
four-factor test.
The equitable discretion over injunctions, granted by the
Patent Act, is well suited to allow courts to adapt to the
rapid technological and legal developments in the patent sys
tem. For these reasons it should be recognized that district
courts must determine whether past practice fits the circum
stances of the cases before them. With these observations,
I join the opinion of the Court.